May 19, 2024

You’re the Boss: Other Than That, We Loved the Place

Start-Up Chronicle

My wife went to New York City last week to see a show. Afterward, she went to dinner with some friends who ran into some other friends and they all dined together.

When one couple found out my wife had just driven in from the Hamptons, they got around to discussing the food scene (after the weather and the rental prices). And when they mentioned that they had tried that new place called Southfork Kitchen, my wife, coy as ever, asked how the couple enjoyed it.

“We loved the ambiance,” said one guy.

“The food was scrumptious,” said his partner. “Very local.”

“The music was just perfect.”

“And the desserts were out of this world.”

“We had just one complaint.”

“Oh, yes, one little giant complaint.”

“What was that?” asked my wife.

“The owner,” said the first guy.

“He wouldn’t shut up,” said the second.

“We went for a romantic dinner and he comes over and starts to talk and goes on and on and we didn’t want to be rude, so we kept asking questions and he kept answering the questions and we couldn’t get rid of him.

“Other than that, we loved the place.”

Bruce Buschel owns Southfork Kitchen, a restaurant in Bridgehampton, N.Y.

Article source: http://feeds.nytimes.com/click.phdo?i=01803f61a2fa9a656ed87af99282b4b8

You’re the Boss: Do You Still Use Print Ads?

Staying Alive

In the 25 years I’ve been in business, I have tried a variety of ways of reaching customers: print advertising, a retail store, a Web site in the days prior to Google and search-engine optimization, a Web site with extremely poor S.E.O. and the early versions of AdWords, and now a Web site with good S.E.O. and the current AdWords.

Back when there was no Internet, I ran an ad showing my tables and chairs every month in the local city/lifestyle magazine, and it did pull in customers. I did this from 1994 to 2004, after which it was apparent that Google was far more efficient and effective. My print ad (if I recall correctly, it was a 4-inch x 5-inch ad, in black and white) would generate on average two calls a week. Each ad cost me $2,500 a month, and never produced more than $350,000 annually in new sales.

Each new dollar would yield, on average, another 17 cents somewhere in the following three years in repeat business. (Keep in mind that I sell furniture, where the opportunity for repeats is limited –how many dining tables do people need? And word-of-mouth business in furniture sales is almost nonexistent.) This was sufficient for a while, but I could never get beyond that $350,000 ceiling. I tried running in other local publications, but the sales did not rise proportionally to the higher spending — most likely the same people were reading all of the magazines I tried, and the additional ads were redundant.

Now, using Adwords and an effectively designed site, I spend about $8,000 every month and pull in between $150,000 and $250,000 a month in sales. Higher spend but much higher yield. Also, I am reaching a different client, one who, in the days of print, would have been inaccessible to me. My corporate and government clients are widely scattered, and only interested in my products for a brief period of time. Google brilliantly connects this type of buyer with specialized producers like me. These clients are primarily interested in completing the transaction so they can resume their ordinary duties. This contrasts with residential work, where the sales cycle can last years, and the demands for extreme customization make production inefficient. Our margins for conference tables allow the business to thrive, while the margins on dining tables are barely adequate for survival. Consequently, I’m no longer interested in residential business.

I still get calls from people trying to sell me print ads — the local magazines and newspapers, various directories, charity-event programs, you name it. I politely decline, of course. I have better ways to spend my ad dollars. And at the same time, I do see advertisements in local and national magazines, and get all kinds of catalogs and junk-mail advertising. Our phone company drops off a heap of Yellow Pages every year that I promptly recycle. The local newspaper is still filled with ads, although the classified section is pretty much gone. There’s still a lot of print advertising.

It looks to me as though magazine ads make good sense if you are a nationally known, established brand. They act as a little nudge, saying “Remember me? I do this!” I imagine they work best when they are run continuously and ubiquitously. But wow, the price of a national print campaign must be enormous. The newspapers and magazines I read are full of that type of ad, but there are also ads for smaller, local concerns. These people couldn’t possibly be running a national campaign. It would be way too expensive.

Here’s my question: Are the people buying those ads simply caught in past habits? Or victimized by clever sales representatives? Or are there situations where putting your message on a dead tree is still the best option? For what type of business is this the best option? I’d love to hear from any small business who is using print media successfully, and please be detailed about the type of business you are in, the type of ad you run, and what kind of publication you choose.

Maybe it’s a local shopper newspaper, maybe you distribute fliers, maybe you put postcards in those strange packets one gets in the mail. In these days of Web and social media, it’s easy to assume that the old channels are dead for small companies. Can someone show otherwise?

Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside of Philadelphia.

Article source: http://feeds.nytimes.com/click.phdo?i=a5924e78f9b834c6ddaea6420739b0c0

You’re the Boss: Should I Give My Employees a Bonus

Staying Alive

Thanks again to all who took time to comment on my three problems. Last week, I further addressed the issue of whether I should toss my aging servers and move my data to the cloud and the issue of whether I should buy a building or continue renting. And now, finally, the employee bonus versus investing in the company question.

What I asked: Should I spend $20,000 investing in new machinery or rewarding my workers with an unexpected bonus?

Consensus advice: Buy the machine — but if I want to reward the workers, do it with a gift of some sort instead of with cash.

My thoughts: I agree that the sensible thing to do is to buy the machine: It’s a great deal and will lead to enhanced productivity and future profits. I can’t explain why I felt I should give out a bonus.

The desire to shower riches on my people is an impulse that I have consistently felt in all of my years as a boss. Is this some defect peculiar to me, or is it behavior left over from prehistory, when tribal chiefs were expected to spread the wealth around? Whichever, I know it is a dangerous proclivity. So I’m glad I asked the question, because my readers were unanimous (has that ever happened before?). I received a wide variety of suggestions for modest thank-you gifts that would communicate my gratitude at a much lower cost than $20,000. Good advice!

There seemed to be some disagreement as to whether a surprise bonus should be cash or some kind of gift. I know which I’d want: cash. Personally, I hate shopping for gifts, so maybe that’s why I prefer to get and give money. Quite a few people suggested tickets to sporting events. But is giving my money to the local sports millionaires a better idea then letting my workers choose how they would like to use their bonus?

As business improves, and our cash position becomes more comfortable, I have been mulling whether to give raises. My employees are still making about 10 percent less than they were in 2008 (the ones still with me, anyway). I know that a few of them feel bad about that. But were the 2008 wages appropriate then, and are they appropriate now?

I was losing money then, and I’m making it now. I believe that the adjustment in my costs was very important in keeping the company alive. Nevertheless, if you have never looked employees in the eye and cut their pay, challenging them to take it or quit, you might find my desire to be generous hard to understand. There are aspects of the boss-employee relationship that reveal a naked power imbalance. Some people might revel in the power, but I find it distasteful. (Firing people is another power that is quite distressing to exercise.) Maybe I wanted to give that bonus as a kind of apology for the pain I put them through. Not that I had any choice and not that I would do it differently if we hit hard times again.

I don’t want to give out pay raises as a matter of course. I think I’m paying people more than they could get in any other local shops. No one has left for another job; no one has asked for a raise. But I would like to hold out the possibility of more pay. I’d want a raise to be explicitly tied to increased productivity, and in particular to the efforts of the workers to improve operations. For example, when I bought a specialized veneer-splicing machine, our productivity went up about 10 percent. I don’t feel that I should reward the workers for that.

The sander is another investment of this type. But if one of my people comes to me and tells me of a better way to glue panels, one that would increase output by 5 percent, that person should be rewarded. I’ve been asking for new ideas at every Monday meeting but have received few suggestions. Maybe a system that explicitly rewarded real increases in output would shake more innovation loose. Or possibly just get people moving faster.

What I did: I bought the sander. Took a quick trip to Utah to take a look at it, and it was everything I was hoping for. It will be here next week. I’m also going to spend more time trying to design a bonus system that creates incentives for the innovation I’m looking for.

Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside of Philadelphia.

Article source: http://feeds.nytimes.com/click.phdo?i=55a1e25b1e562ed05ed1325caaca9882